Ms Marks said: “Older people in Wales who have worked hard to save for their retirement could be significantly worse off under this proposal paying £259 more in tax a year on an income as low as £10,500. Older people regularly tell me that they are struggling to pay their bills and to keep warm living on a fixed income, in these already difficult economic times.

“Many older people will worry about the potential loss of income, which will leave them even more exposed to future increases in food and fuel costs. Although the plans to introduce a flat rate pension of £140 per week are to be welcomed, it is disappointing that this will not be introduced until 2016, meaning that any benefits will not be felt immediately.”

She added: “We recognise that people are living longer and we are living in an ageing society. We hope that the Chancellor’s announcement of the ‘automatic review’ into increasing state pension age will give people greater choice and control over their working lives and that individual circumstances will be reflected.”

Kayte Lawton of the IPPR said: “While the way that the Chancellor announced ‘granny tax’ in the Budget was a political own goal, the policy change is the right thing to do. It is time for older people to share some of the burden of deficit reduction.

“Older people have been relatively protected from welfare and spending cuts so far. By contrast, younger people have had to give up entitlement to EMAs, the Future Jobs Fund and have experienced the highest unemployment since comparable records began in 1992.

“IPPR analysis shows that the greatest losses will be felt by relatively better-off pensioners: pensioner households in the fourth income quintile.”

The support came as Conservative Wales Office minister David Jones blasted the Welsh Government on-air for not its criticism of the Budget, accusing First Minister Carwyn Jones of “whingeing” and holding a “begging bowl”.

He said: “I find it unbelievable that Carwyn Jones should continue his whinge and frankly it is a whinge and he is keeping up the whinge quite conssitently about there being nothing in it for Wales. As a consequence of this budget Wales is getting in cash terms an extra £11.7m.

“Since the spending review in 2010, Wales, the Welsh Government, has had an additional £500m. In addition to that, just look at what we have delivered – enhanced capital allowances for the Deeside enterprise zone which should deliver another 5,000 jobs.”

Adding that there was £12m funding to bring high-speed internet to Cardiff and further investment to improve mobile phone coverage along the A470, he called on the Welsh Government to work with the coalition to secure the electrification of the Valleys lines.

He said: “I think, actually, it's time for Carwyn Jones to stop whingeing, get on with the job of delivering for Wales... The Welsh Government has got a duty to deliver as well.

“It's got to make a business case. The Wales Office and the Treasury announced yesterday and we've announced previously that we're very favourably inclined towards the electrification of the Cardiff-Valleys lines.

“It's now up to the Welsh Government to work with us to make the business case.

“And we want to deliver that but frankly the problem that we have got is we have a Welsh Labour administration in Cardiff which seems to think that its role is to hold out the begging bowl without doing anything itself to help.”

The UK Government signalled its strong support for regional pay in the public sector when it published evidence showing a gap of 18% in Wales with the private sector.

Unions and opposition parties are alarmed but Mr Jones said the private sector needed a “competitive edge”.

He said: “We believe it is important that private enterprise throughout the UK should be able to compete with the public sector. What you have to remember at the moment is, across the board, public sector workers in Wales get 18% on average more than in the private sector.

“We want to encourage wealth-creators to come to Wales and we want to make sure that the private sector can employ people. We want to get people off the dole and into work and the only way that that will be done is by giving the private sector a competitive advantage.

“This is something that we're looking at very actively.”

He continued: “I think there is no doubt that the cost of living in Denbigh is considerably less than it is in Dulwich. I think even teachers in Denbigh would agree with that.”

Stating that this would not be automatically rolled out across all areas of the public sector, he said: “[If], for example, the Welsh Assembly Government doesn't like the policy in the sectors where it itself is the employer it doesn't have to adopt it but I think if it wants to make Wales a vibrant place for people to come and set up businesses to work it’s got to look seriously at this issue.”